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Business Law Important Topics UNIT - 2 THE CONTRACT ACT 1872 LEGALITY OF CONTRACT The Legality of object and consideration Agreement opposed to public policy AGREEMENTS DECLARED VOID AND CONTINGENT CONTRACT The Agreement expressly declared to be void Wagering Agreement Contingent Contract Differences between Wagering Agreement and Contingent Contract DISCHARGE OF CONTRACT Modes of Discharge of Contract The Doctrine of Frustration/Supervening impossibility of Performance BREACH OF CONTRACT Remedies for Breach of contract If you found this useful then share with others as sharing knowledge means gaining knowledge. If you have any doubt then use the comment section below. If you want to download this as study material, drop me a message in the below contact form and lastly if you want latest Accounting lessons, study materials, IQ lists and many more like this then subscribe my blog with your email and start your journey with Learn At Ur Desk. Un...

Parties to a lawful contract are bound to perform their respective obligations. But when one of the parties repudiates the contract, by refusing to perform his obligations he is said to have committed a breach of the contract. In case of breach of contract, the law provides the following remedies to an injured party: 1. Cancellation or Rescission: Rescission is the revocation of a contract. It is the way by which a contract may be discharged. Where one of the parties to a contract commits a breach, the other party may treat the contract as rescinded. He is freed from all the obligations under the contract. For example: ‘A’ singer contracts with ‘B’, the manager of the theatre to sing at his theatre for two nights in every week during the next two months and ‘B’ engages to pay her Rs 100 for each night performance. On the sixth night, ‘A’ willfully absents herself from the theatre and ‘B’ in consequences rescinds the contract. ‘B’ is entitled to claim compensation for the damag...

Introduction:  The doctrine of frustration known to English law has been recognized under the Indian law in Section 56 of the contract act. Frustration means the discharge of a contract rendered impossible of performance by external causes beyond the contemplation of parties. In order that the doctrine of frustration as embodied in Section 56 of the Contract Act may apply, the following three conditions must be satisfied: i) The act should have become impossible. ii) The impossibility should be by reason of some event which the promisor could not prevent, iii) The impossibility should not be self-induced by the promisor. A contract may be valid at the time it was entered into, but subsequently there may arise an impossibility which may prevent its performance. The result is that the contracts become void and the parties to it are discharged from their obligations. For example: ‘A’ and ‘B’ contract to marry each other. Before the time fixed for the marriage, ‘A’ goes m...

A contract is said to be discharged or terminated when the rights and obligations created by it are extinguished. The following chart shows the various modes in which a contract may be discharged: Modes of Discharge 1. DISCHARGE BY AGREEMENT: A contract is created by the parties to it. Similarly, it can also come to an end by their mutual agreement. They may terminate in many ways: i) Novation: It is a transaction by which with the consent of all the parties concerned, the old contract is revoked and substituted by a new contract. For example: ‘A’ owes money to ‘B’ under a contract. It is agreed between ‘A’, ‘B’ and ‘C’ that ‘B’ shall accept ‘C’ as his debtor instead of ‘A’. the old debt of ‘A’ to ‘B’ is at an end and a new debt from ‘C’ to ‘B’ has been contracted. ii) Remission: It means acceptance of less amount or lesser degree of performance than what was actually due under the contract. It is a unilateral act of the promise discharging at his will and pleasure ...

The following are the differences between the Wagering agreement Contingent contract Basis of distinction Wagering agreement Contingent contract 1.        Meaning Wagering is an agreement between two parties by which one party promises to pay money or money’s worth on the happening or non-happening of a future uncertain events (Sec. 30). Contingent contract is contract dependent on the happening or non-happening of a future uncertain event. (Sec. 31). 2.        Reciprocal promises Wagering consists of reciprocal promises. Contingent contracts may not contain reciprocal promises. 3.        Validity It is a void agreement. It is a valid contract. 4.        Interest Both the parties are interested in the stake money. This is not so in case of contingent co...

Definition : “A contingent contract is a contract to do or not to do something, if some event, collateral to such act, does or does not happen.” In short, a contract which is dependent upon the happening or non-happening of an uncertain future event, is said to be a contingent contract. For example: A contracts to pay ‘B’ Rs. 10,000 if B’s house is burnt. This is a contingent contract depending on the happening of future uncertain event i.e. fire. Essentials of Contingent Contracts: 1. Contingent contract is a kind of conditional contract, which must be uncertain. 2. The contingent event must be collateral to contract. 3. Performance depends upon happening or non-happening of future event. 4. Contingency also depend on the will of a person. 5. A contingent contract are enforceable under sections 32 – 36.

According to Section 30, agreement by way of wager are void. No suit will lie for recovering anything alleged to be won on any wager or entrusted to any person to abide by the results of any game or other uncertain event on which any wager is made. Definition: Wager means a ‘ Bet ’. A wager may be defined as an agreement to pay money or money’s worth on the happening of a specified uncertain event. It is a game of chance in which the chance of either winning or losing is wholly dependent on an uncertain event. Each party stands equally to win or to lose the bet. For example: Two wrestler’s R and B agreed to play a wrestling match on condition that the party failing to appear on the date of match was to forfeit Rs 500 to the opposite party and winner was to receive Rs. 1,000 out of gate money. R failed to appear at the match and B sued him for 500. It was held that the agreement was not of wagering nature. In wagering agreement each party should stand to win or lose according to th...

“All illegal agreements are void but All void agreements are not illegal.” Discuss  in detail. According to section 2 (g), “an agreement not enforceable by law is void.” Such agreement does not give rise to any legal consequences and is void ab initio. It will be useful to distinguish between illegal agreement and void agreements. An unlawful or illegal agreement is one which is actually forbidden by law. A void agreement on the other hand, is not forbidden by law as in the case of a contract with minor. But both illegal and void agreements are not enforceable by law. Thus, “All illegal agreements are void but All void agreements are not illegal.” The following agreements have been expressly declared as void by the Indian Contract Act: 1. Agreement made by incompetent parties [Sec. 11]: According to Section 11, the following persons are incompetent to contract, and contracts entered into by these persons are void: i) A Minor ii) Person of unsound mind iii) A person disq...

An agreement which tends to promote corruption or injustice or is against the interest of the public is considered to be opposed to public policy. These are certain agreements that are opposed to public policy and hence unenforceable or void: 1. Trading with enemy: Trading with enemy is clearly against public policy. Besides, it is against national honour to indulge in such acts in times of national emergencies. 2. Stifling prosecutions: It is in public interest that criminal should be prosecuted and punished, to compromise a prosecuted and punished, to compromise a prosecution is illegal and void. It is not open to the parties to take the administration of justice out of the hands of the authorities. For example: A police officer was bribed by an accused for withdrawing criminal proceeding instituted that it is against law the agreement is invalid. 3. Maintenance and Champerty: ‘ Maintenance ’ may be defined as an agreement whereby a person promises to maintain a suit in wh...

According to Section 23 of the Indian Contract Act, “an agreement of which the object or consideration is unlawful is void.” Both the object and the consideration of agreement must be lawful otherwise the agreement would be void. The consideration or the object of an agreement is unlawful in the following cases: 1. If it is forbidden by Law: If the consideration or object for a promise is such as is forbidden by law, the agreement is void. Section 26, 27, 28 and 30 of the Contract Act deals with cases where the consideration or object of an agreement is considered unlawful. An act or an undertaking is forbidden by law: i) When it is punishable by criminal law of the country or ii) When it is prohibited by special legislation or regulations made by a competent authority under powers derived from the legislature. For example: An agreement to pay consideration to a tenant to induce him to vacate premises governed by the Rent Restriction Act is illegal and cannot be enforced be...